I think you made the right decision, you've probably avoided a lot of stress/messing around/anguish! I was in a similar situation once over a $450 mini-lathe, dealing with the chinese company was frustrating and Paypal were unhelpful, refusing to acknowledge my consumer rights under Australian Consumer Laws. It took me three months and then only after I got the Australian financial authorities involved did Paypal relent and give me a refund (grudgingly, I must add).
I should have taken the company's best offer!